Juan Guaidó, president of Venezuela's National Assembly and the self‑proclaimed interim president of the country, has issued a decree prohibiting further shipments of oil to Cuba.

Analysis

Mr Guaido's resolution was approved unanimously by the National Assembly, and takes immediate effect. The Venezuelan opposition has been critical of Venezuela's agreement to supply Cuba with oil at preferential terms in exchange for the sale of professional services since it was signed between the then Cuban and Venezuelan leaders, Fidel Castro (1959‑2008) and Hugo Chávez (1999‑2013), in 2000. At this stage the decree is mainly symbolic, given that Mr Guaidó does not officially control the Venezuelan state despite being recognised as interim president of Venezuela by the US and more than 50 other countries. The embattled leader of the regime, Nicolás Maduro, still controls the army and state oil company, PDVSA.

Venezuelan oil shipments have been crucial in propping up the Cuban economy over the past two decades, and the sale of professional services (mostly to Venezuela) remains Cuba's largest source of foreign exchange. However, as the Venezuelan crisis has deepened, Cuba has taken measures to reduce dependency by diversifying its sources of oil and professional services sales. Imports of oil from Venezuela have fallen from over 100,000 barrels/day (b/d) between 2008 and 2013 to 40,000‑50,000 b/d today. That oil has been replaced by increased imports largely from Algeria and Russia. Likewise, from a high of over 40,000 workers in Venezuela, Cuba now says that it has around 20,000, over 90% of which work in healthcare.

Cuba consumes 130,000 b/d of oil (the number has fallen since energy saving measures were enacted in 2016). Internal production has increased from 6% of domestic needs in 1990 to around one‑third of the island's consumption today. The proportion of import spending used for fuel imports has fallen from more than 45% in 2014 to less than 20% today. Low crude prices will help the country to weather any sudden halt in shipments.

For now, Venezuelan oil continues to arrive in Cuba. The most likely action in limiting this would be US sanctions against shipping and insurance firms transporting Venezuelan crude to Cuba.